Buffett's Pricey Rail Trip

BERKSHIRE HATHAWAY'S AGREEMENT to buy Burlington Northern Santa Fe (ticker: BNI) for $34 billion looks like a good deal, but not a great one, for Berkshire and its CEO, Warren Buffett.

The good news is that Berkshire (BRK-A) is deploying a sizable amount of capital in the transaction and will directly benefit from Burlington's earnings once the transaction is completed, which is expected in the first quarter of 2010. Burlington is likely to earn about $1.7 billion this year. Berkshire now receives only dividends on its current...